How 3D Systems Corporation, Stratasys, Ltd. Could Benefit From HP

3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS) are among the pioneers of 3D printing industry. With their innovative technologies, they have turned a science-fair curiosity into a widely accepted manufacturing technique that is used in automobile, aviation, jewelry, dentistry and other industries. However, the industry remains small. 3D Systems and Stratasys each have a market value of approximately $6 billion.

Last week, Hewlett-Packard Company (NYSE:HPQ) announced that it will enter the 3D printing market in 2016 with its Multi-Jet Fusion technology. The tech heavyweight claims that its Multi-Jet Fusion technology is 10 times faster than the existing 3D printers. What’s more, HP’s technology is more affordable. The Palo Alto-based company claims that its advanced technology could popularize 3D printing industry.

3D Systems’ CEO worried about HP’s entry

However, 3D Systems CEO Avi Reichental has expressed concerns over HP’s entry into 3D printing industry. Wohlers Associates analyst Terry Wohlers said HP’s technology is so revolutionary that it could throw many other firms “out of business.” Hewlett-Packard’s lower costs and faster throughput would make 3D printing industry more competitive.

Shares of 3D printing companies have declined significantly this year amid worries about entry of new competitors. Besides HP, Autodesk is also planning to enter the market. 3D Systems stock is down 58% year-to-date, while Stratasys has plunged 8%. Contrary to investors’ perception, the entry of giants like Hewlett-Packard could actually benefit existing but relatively smaller companies such as 3D Systems and Stratasys.

HP will raise awareness of 3D printing

HP will likely endorse the 3D printing industry. It will increase awareness and help the industry break into mainstream manufacturing. According to research firm Gartner, global shipment of 3D printers will grow from about 100,000 units this year to 2.3 million units in 2018. HP will be one of the first major technology firms to break into 3D printing industry.

Stratasys CEO David Reis says he views the entry of HP into 3D printing as a positive sign for the industry. Further, HP’s technology won’t hit the markets until 2016, giving 3D Systems, Stratasys and other smaller players plenty of time to catch up on its innovations.

Author: Vikas ShuklaAlthough he has a background in finance and holds an MBA, Vikas Shukla is a technology reporter. He has a strong interest in gadgets, gizmos, and science. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com